Big News – China Buying Gold Mines Worldwide!

Written by James Dines
Posted March 7, 2020

Publisher's Note: Today, Mr. James Dines, "The Original Goldbug," brings you news of a major trend in the gold market that has flown under the radar for many investors.

Read on for an excerpt from The Dines Letter and to hear about China's major moves in the gold market.

Call it like you see it,

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Nick Hodge

"Problems are messages." —Shakti Gawain

China has been continuing its farsighted worldwide quest to hoard as many natural resources as it could get away with — as often discussed in TDL. No other nation is preparing on the same scale as China when it comes to ensnaring future access to natural resources. TDLrs worldwide should inquire whether their nation would be able to compete without them.

Gold is a natural resource but it is also a precious monetary metal, useful far beyond its industrial applications. Owning gold mines is an effective way to provide future access to those mines’ gold reserves. As the price of gold rises, so does the value of their gold in the ground. In 2019 a record $30.5 billion was spent on mergers and acquisitions of gold producers worldwide.

Over the past decade, while the price of gold was lower, China’s gold companies sought to acquire gold mines and mining companies, just as China had presciently done with so many other metals and natural resources. We predict that those assets are not being bought seeking capitalist profit for resale — China will never sell them. As noted, current capitalism has not yet adjusted to China’s very visionary plan.

Chinese gold companies are actively seeking international gold assets to secure their future production, and also to lessen, or replace, China’s dependence on the U.S. dollars that partially back its yuan. China is already the top gold producing country in the world! In 2018 it produced 12%, or 399.7 tonnes, of the world’s 3,332 tonnes. We predict that will increase until the world awakens and scrambles to buy gold mines at any price of paper money.

In early October 2019, several Chinese companies tried to purchase a Canadian gold miner, Iamgold (IAG), but failed to reach a deal. The interested Chinese companies were China National Gold, Shandong Gold, and Zijin Mining. Those 3 companies are either state-owned, state-backed, or publicly traded corporations.

The executive vice president of China Gold International Resources Corp, the overseas arm of China National Gold, said at the Denver Gold Forum in September 2019 that his company is “looking for acquisition opportunities quite aggressively.” They are targeting companies with assets in operational stages, with a price range between $1-$2 billion. He also mentioned that his company would be interested in any asset sales resulting from Barrick Gold and Newmont Goldcorp’s possible divestments after those companies’ recent mergers. (Barrick merged with Randgold, and Newmont with Goldcorp.) Randgold will be a primary target of ISIS in west Africa, so we would avoid the new Barrick.

In November 2019, Zijin Mining purchased Freeport McMoRan’s copper-gold assets in Serbia for up to $390 million. Then in December, Zijin Mining Group announced it would buy Continental Gold for C$1.3 billion. Continental Gold is a Canadian company with properties in Colombia, another beachhead for China in Latin America.

Many Chinese companies have existing deals or structured alliances with gold companies outside China. One example is Barrick Gold and Shandong Gold Mining (a subsidiary of Shandong Gold Group). In April 2017, Shandong Gold bought a 50% interest in Barrick’s Veladaro mine in Argentina for $960 million. Then in 2018 both companies invested up to $300 million in each other’s shares. Shandong is among the largest gold producers in China, and it has a mandate to become one of the ten largest in the world. They mean it.

Mining executives in other countries who are TDLrs should take note, and formulate a plan now, to remain competitive in the future. Not just for future gold reserves, but for all necessary precious and industrial metals.

James Dines is legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community. He is the author of five highly regarded books, including "Goldbug!," in addition to his popular newsletter, The Dines Letter, and videotaped educational series. Dines' highly successful investment strategies have been praised by Barron's, Financial Times, Forbes, Moneyline, and The New York Times, among others.

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